#354: The Property Trio’s Debut LIVE Episode - A Market Pulse & An Interactive Q&A With Our Live Audience

[Music] Welcome to Australia's Viercely Independent Property Podcast. Residential property is the only asset class we live in. It's where we raise our families and it's our most expensive investment. Yet property advice remains unregulated. [Music] Listen to three pioneers of the property industry, each with diverse areas of expertise in property planning, buying and quantity surveying. We'll distill the raw truth from the ill-informed. Join the property planner, David Johnston, the property buyer, Kate Baker. That's me. And me, the quantity surveyor, Mike Mortlock, has we take you on a journey through the maze of property, mortgage and money decisions to empower you to create your ideal lifestyle. Today, we're bringing you a very special episode of the property trio podcast. This one is a little different. It was recorded live at our very first event on the 5th of March 26th. It was an incredible night with a live audience, great energy and plenty of insights. So we're thrilled to be able to share it with you now. Welcome everybody to our first ever live recording of the property trio. It's only taken 350 episodes to get here, but better late than never. I'd like to welcome my co-hosts, Mike and Kate tonight. How are we? And the former original Musketeer, Peter Kalizas. So come all the way from Adelaide. So tonight, we're going to do a bit of a market pulse, rather than a full market update. We're going to answer a few questions from you guys. And a few questions we've put together from our most popular episodes. Then we'll throw it over to yourselves to fire away at any questions you'd like to ask us in person. Please don't be shy. We can always delete your question if it's a- But it could go on your team. If it's no good. More if we're out. Our response is no good. And then we're going to just finish with a bit of a wrap up of how we see 2026 playing out. And obviously there's been a bit going on in the last four or five days around the world that could change things somewhat. So without further ado, thanks a lot for coming along tonight. And I'll hand you over to Peter. Thank you very much, Dave. Pleasure to be here on Sunny Melbourne. And for a change, it is quite sunny here. So it is certainly wonderful to be here. So beginning of the month, a lot of data comes out. I'm going to start off with asking the hosts what they think of the most recently released property data. Kate, I'll start with you. Thanks, Kate. Well, we saw started from all over, but we often talk to the the Cotality data. And we've shared a few things behind the scene so that we don't double up. But I'm intrigued with the rental growth and also obviously that plays a part with our growth rental yields. So we've got our cities that are doing really well. Just gangbusters. We've exhibit eight. And we've seen Perth and Darwin and Brisbane and Adelaide just performing at the heights of heights. And of course, as we all know, in Melbourne we've not been doing quite as well. We've been very static. But what has changed for us is obviously that pressure on rents. We've had a lot of investor-led sales. And we can see that in the data. So if you'd asked me three, four, five months ago, I was thinking is Melbourne exhibiting a more stabilized rental landscape? Or are we showing signs of things hiking up again? And so for the last three consecutive months, we've seen our rents increasing again. And interestingly, if we look across all of the capital cities for the last 12 months, none of them except for Canberra have been within our target inflation band. So every other city has been performing above 3%, which is really interesting. Some of them have done significantly more. But when we look at the gross rental yields, we can see that Melbourne's maintained a really strong gross rental yield. And some of those high performers like Darwin have started to come down because their capital growth has been really strong. And of course, when your rents are holding firm and your prices are moving up, you'll see that your gross rental yield will start to decline. So Melbourne is looking at having gross rental yields that are above all of the cities that we used to sit in tandem with. So that's one draw card for Melbourne investors. But that was the part of the data that I wanted to chat about tonight. Thank you, Kate. Dave, what's your take on it? Well, look, I normally have about 20 pages of information from me. So I've got a few pages tonight. And so I couldn't read off actual data. So if we look at the month of February, that's just occurred. One of the capital cities I've been talking about probably for the last five months is Hobart. And so in one of the episodes, probably a few months ago, I think Mike and I called the bottom of the Hobart. And I'd been talking about the signals that Hobart was showing leading into that point. So if we look at February, Hobart has moved 1.2% off 0.5% in January. So I think we're potentially about to move into a run for Hobart. Because generally when a capital city has a big bump like that, it tends to last. And also it tends to be a bit of a lag. Also more and more people see that data. So then they start looking in that capital city. So I think that's about to play out in Hobart. Another little interesting tidbit was the median price for houses in Australia has just knocked over 1 million dollars. I don't know, do we clap for that? We clap for a boom. We're in Melbourne. It's fun. Friends will either an owner or a buyer. Yeah, that's right. So, 1 million and five. So that's a big, big number. Now most of us in this room are from Melbourne or Victoria. Unfortunately, Melbourne slid down the ladder to sixth position in February. So Melbourne's median has now fallen below Adelaide's. Okay, so Pete, raise your arm. You have taken over. Pete, when he was on the podcast, Adelaide prices were flat for about three. Four, I left at the wrong time. You left at the wrong time. He was fixing that too well. So Adelaide's median for houses is now, or capitals is now 980. Melbourne's 977. But, you know, that probably means Melbourne could be heading towards being a good place to buy. What else have I noticed? A couple other things that I'll note were in terms of rent. So, rents have been increasing across Australia. Not every capital city, but the median across the nation since October 2024. Okay, so that feeds into inflation. That feeds into interest rate risks. All right, so it was 0.7% in February. The highest it's been for a little while. So, it was 1.7% for the quarter. So that's a pretty big number. 6.8% if you analyse that. So that is going to put more pressure on interest rates. It's going to put more pressure on public policy as well in terms of capital gains tax, which might be a question we're answering later. And other factors such as that. So there's a few more things I would normally touch on. But that'll probably do meep for now because we've only got so far. So long we can talk for tonight. Thanks you, Dave. Just a mark of pulse, isn't it? Yes, not a mark. I've got just a pulse. That's right, Mike. So what are you feeling there? What are you feeling? 43 beats per minute. Are you bragging? 43 beats per minute. No, look, the big takeaway for me is almost like a changing of the guard. Because anyone that listened to our sort of 2025 wrap would know that a Darwin was. It won the growth of all the capital in Australia. And the last print we saw, which is the February data we're just talking about, what do we like? I think it was 0.2% and typically it was doing over 1% a month and over two in some months. Perth continues to gallop ahead. I think we've scored 2.3. Yeah, 0.3. Look at that. Up here. It's $22,000 a month. Like that, that's amazing. It's nearly $1 million median house price. If you're getting 2.3% growth per month and you're out there buying a median house and Perth, you're looking at $23 a month that you need to add to your budget if you miss out a auction. It's frightening. We were having a bit of a chat, Pete and I before today, basically trying to figure out what's going on there. So if you contrast, say Darwin to Perth, Perth has 48% less listings than the five-year average right now. So there's just no stock. So that just really feeds into competition. I am quite surprised that Perth has continued to move. Because I mean, we're talking 2023, 24, 25 continues to post massive numbers. And we're talking like annually 20% growth. And even across all the capitals, we're at like 9.6% annual growth. So the market is absolutely humming. Based on fundamentals, well, I suppose the listing shortage is a big one. Supply is also another one. And if we do talk about CGT, I'll talk about why maybe supply was more important than say targeting property investors. But Darwin's an interesting case for me because we're talking about a population of 150,000 there or thereabouts. I feel like that market has really moved on investor behavior rather than localized owner-ock, upgrade as those sorts of things, where it's Perth is a little bit different. Perth is still supported by a fairly good ratio of household income to asset price, even today, after all of that growth. I think that's kind of something that you need. Like money doesn't just come from nowhere. You need household incomes to support that price growth. I think the fundamentals in Perth are still quite strong, but really this is the first month for me where I've seen weakness in Darwin. And maybe shows that we'll go back to that period where it's a flash on the pan-growth where you could have a decade of nothing. - Yeah, actually Perth, I agree, I think it still could have further to run. I actually did look up a bit of data on Perth for this episode, just in case I might come up. But if you look at Perth, it's a wealthiest, part of the wealthiest state in the country by a reasonable margin. It's 40 to 45% of all mining in the country. It produces 1.6 times its populations, share of the economy when it comes to GDP. So it's like 16 to 17% of GDP, but only 11% of the population in our country. So it's just tipped over 3 million. People in Western Australia has really high interstate migration. There's still a lot of factors that are really positive. But look, if the price of iron ore drops, then it might struggle and it might struggle for a long period of time. So that's always the risk with Western Australia is its reliance, particularly on iron ore. - Yeah, and even like resource, it's more broadly speaking with rear earth and that sort of stuff. I mean, Perth tried to not be part of Australia twice. If you look at it historically, - It's a federation. - Yeah, like in the beginning, and I think even New Zealand was in the chats of like, "Okay, what is Australia like? Is that part of it?" And in the beginning though, we're like, "We don't think we want to really do this." They ended up getting absorbed. - I know what they called when you try to leave the federation again. - Yeah, the word for that. - Did I? - The episode of the Deep Dive inter-sheet. - That's that. - I can't remember. There was also a big resurgent, I think it might have been like, maybe in the 20s where they actually was a flag, like West Australia was the state. They're actually thinking of seceding from the straw. - From the bird's seceding. - Was that it? - It's seceding. I couldn't think of it when you asked me, but there it is, it stuck somewhere in the back. And you can't see why, because they are like the economic engine room. - Oh, it's got it. - Yeah. - We kind of need them. I mean, they had a good go during COVID of having that concrete border. I mean, so did you, the historians, and now you've probably got that, oh, I forgot what I wanted. - You always bring that up. - Well, that set up the wrong route to have a go of a Victoria. But yeah, the overspending on the COVID lockdowns, the state debt problem that we have in Victoria. I mean, that speaks to some of the house price issues, but it's more than that. It's also policies, the minimum standards, the land tax. There's a million different reasons, but I think we had a listen to questions about why Victoria is on the nose from the last time in the station point. - That's coming later. - So we'll keep a power to drive. - Very good. Okay, thank you for that. Now we've got a question here from Jeremy in the audience who asks, with the Senate inquiry, report you on the 17th of March, and Treasury reportedly modeling a reduction of the capital gains tax discount to 33%. What do you predict is the most likely legislative outcome we'll see in the May budget, right? And if the 50% discount is indeed peer back, how would that fundamentally shift your advice on ownership structures and the growth versus yield debate? Dave, I'll start with you. Okay, so I think it's pretty likely to be in their budget. If I was a betting man, I would say 75%, maybe higher. Whether it gets legislated, I would say 50/50. But I think they have the numbers to push it through. It's not often major taxation policy gets instituted in Australia, anymore, particularly when there's such a large percentage of the population who own investment properties or would aspire to own more investment properties. So that is the big risk to any political party. But I think the jungle drums are beating pretty strongly on this one. In terms of the advice changing, I think there definitely could be, there will be more of a push towards property investors, zoning properties inside of trusts, inside of companies, because the capital gains tax discount isn't as advantageous as it has been to this point as an individual. I think it will shift to debate somewhat to more of a yield focus, but I think we shouldn't lose sight of the fact that the highest performing capital growth properties will grow the most in rent, because as a general rule, the rent keeps pace with the capital growth. Okay, so if the capital growth is growing at, say, 8%, then the rent tends to grow at 8%. That doesn't mean the yield is 8%. The yield stays at 3.5%, or 3%. For example, that makes sense. You know, I think there are some of the factors to that question, but at the end of the day, 33% discount is a pretty good discount still, so I think it still lends yourself to high capital growth. What'll be interesting is if any incentives they put in place to buy more new properties, and whether they might keep it 50. I don't know if they'll do this or might make it too complicated, but they could put an incentive. You get a 50% discount still if you buy a new investment property, new property, but not if it's established. So that is a way to obviously incentivize supply, because it's not just about the building of more property, but if you encourage investors to buy more new property, obviously they don't go if they work hand-in-hand. So that'll be interesting as well. OK, thanks for that. Mike, what's your take on it? Just feeling anxious there was Kate's like perfect posture. Yeah, I'm slouchy gov. It's killing me. I don't know why I agreed to sit next to you. Oh, look, I almost feel like how long have we got? I've given up predicting what happens in politics. You know, the Labor government went to two elections with negative-earing CGT as policies that lost them both and Scomo won the unwinnable election. And we were having a bit of a chat on the way over here. The timing is right for Labor to do something just because of the sheer numbers, right? That the liberal parties in tatters, you know, they've got all the power in the world in recent history to be able to do this. Is it a good idea? Well, there's a camp that talks about, OK, well, why did we come up with the CGT discount? Well, it's because if you buy a house for, let's say, $100,000 you sell it for $200,000, like 30 years later, well, the dollars that you paid in the beginning aren't the same because of inflation. And we need to balance that equation. And that all makes perfect sense for an adjustment to the CGT. But the timing, for me, makes no sense at all. If vacancy rates were 2% or 3% in Australia, I would kind of say, look, yeah, maybe this is a reform that we need to have. They've now packaged the negative-earing stuff together. And maybe it's because they think they have the numbers. But when we're sort of like hovering between 1.1 to 1.3% vacancy rate, I think it's really problematic and dangerous for society at large. Because the politicians are obsessed with this idea that you take a property investor out of the equation, magically a first home buyer is born and takes that place. But we know from many different data points, and even the PIPPA survey that when investors sell, there's a proportion that sell to other investors. And you've got to think, like, if you're a first home buyer, yes, there's lots of incentives, and you might be able to get in without STEM, Tudy, or a lesser deposit. But if you are renting and saving for a deposit in an environment where rents have to go up, and look at what rents have done in the last couple of years, we're actually making it worse by disincentivising investors. And I think we also forget about the-- you know, helping investors out with a CGT discount. But we neglect the back end as well. We're sort of punishing investors for taking control of their financial future and being aspirational, and decoifying themselves from the age pension at the back end of their life. We're only really focusing on that front end. So is it going to happen? Look, I think if it's ever going to happen, it's probably likely to be now. I'm personally I'm so tired of the debate. It's like every election cycle. I mean, I had three media sort of requests within a three-week period. One was like, could you model Anthony Alvaneasy CGT discount on his Dullich Hill property investment that he sold? Could you model the after-tax cash flow of his Copa Cabana property with negative geary? Could you then sort of figure out if he sells it, what would his CGT discount? But at the end of the day, like, he bought that Dullich Hill investment property, I think it was like $1.3, $1.4 million back in like 2013 or something. That's not representative of what a normal property investor does in error. own data, a normal property investor spends around about $650,000. I don't know. Is it a good idea? I don't think now is the time to do that. And we've so privileged to be able to have someone like Pete in the room who has with his own research modeled the rental growth over a 25-year period and found that it did not outperform inflation. Obviously those numbers are now a bit different with COVID because we saw that rapid rise. But we haven't really seen rental growth before that period of time. Now we're seeing huge amounts of rental growth. Anyone that's renting a property like, "Oh right now I'm a rent investor. Am I rents going through the roof?" Right? And I think about these people that are in those situations, I just think it's really problematic for society right now. Thank you for that, Mike. Hey podcast listener, we're so glad you're enjoying our show. We put a lot of work into making it great and we'd really appreciate it if you could take a moment to give us a five-star review on your preferred podcast platform. It helps reach more people like you and helps keep us motivated to keep creating great content. Also if you turn on automatic downloads you'll never miss an episode. Thanks for your support and we look forward to bringing you more great episodes in the future. Hey, I want to circle back. There's a question about how it might affect the market. Was that or if I I've no way can go that way? That's right. A perception counts for a lot. A lot of people are talking about this. Plenty of people don't understand it. If I took a poll on the street, do you understand what capital growth, the CQT discount is all about and do you understand what negative gearing means? Most people would say no. And then if I've got a semi-educated group of people that are working in the finance industry, I still think we'd have people that don't understand all these things. And when we have a really careful look at the numbers in Australia, we've got just over 2.2 million property investors. And of that cohort, you'll probably have all heard this data time and time again. Most people stop at one. So we've got 70-something percent of people that stop at one property. And all the people that are up to two properties, that's another. Could send. I'll start. Yes. So by the time we get to someone who's got three or more properties, they're less than 10% of that 2.2 million people. And when you get to six properties or more, they don't even make a seven rate or not because it's such a tiny tiny amount, it's 0.89% of that 2.2 million. So when we speak about the greater population and the property investors, you know, it's no wonder that we're kind of tainted with that greedy investor brush. And it is an issue because it's a small cohort that are doing a lot of heavy lifting. And we've had a lot of disincentives. Mark's talked about them, particularly here in Vick. So I think that we will see a reaction if we have the capital gains tax discount paid back. And particularly if we have the negative gearing restriction kick-in, whatever they're thinking about, I've heard all kinds of rumors. But like all things, you know, people are just. And what we will certainly say in my view is if we have less investors, so if they opt for other asset classes or if we see some investors getting out of the market, we'll see rents in crates. And investors are always attracted to returns. And there's two types of return. There's the capital growth return and there's the rental return. So like all things, you know, if it happens, we'll certainly see an initial reaction. But I think that we'll see things stabilize. And we can't underestimate the power of an election. People will vote with their feet. And as Mark said, I think if there was a time when Labour could get a policy up, it's probably a little bit easier for them to get a policy up now because I think back to 2019 and that cost bill short in the election. Now, those two things were probably key things at cost of an election. But could it happen again? I don't know. None of us really know, but I think we need to anticipate that there will be some change. I think it will be more subtle. I think everyone's well aware of the fact that, you know, there's a cohort there that won't like that policy. I think it's worthwhile thinking about what problem are they trying to solve? Like what are the politicians trying to solve? They're trying to solve the fact that House prices are too expensive, whatever that means. But by any metric, if you look at Household incomes to asset price, you know, 30 years ago, three, four X, now six, seven, eight X, there's no doubt that it's harder to buy a property now than it was in the past. And people like us maybe like make fun of millennials for having the new iPhone and the tattoos and no financial discipline, but they also live in a world where like after pay exists, like there's never been an easier time to be parted with your money. But at the end of the day, the government needs to understand that they kind of privatized the public housing sector. They own something like 380,000 dwellings. We need roughly 3 million dwellings if we talk about say a third of households renting and there's about 11 million dwellings. That's pretty good. Correct me if I'm wrong. You are on the next age, aren't you? I read it so you shouldn't think. You should know your numbers. I've been called. So like the problem that we're trying to solve is that housing is expensive. And they're pointing conveniently at property investors, but also basically sort of saying, yeah, thanks. We didn't want to be owning housing. We wanted to privatize that. But the issue really is the supply. The government's ability to bring on new housing supplies. So does anyone remember the 1.2 million homes in five years? Big Albo press release. One July, we will actually enter year three of that five. And on an annualized basis, we need 240,000 homes. Now I would also argue that with immigration, that number is probably a little bit out of day because immigration numbers have probably been a bit higher than what was forecast there. But even at that 240,000 a year, we're delivering 170, 190,000 homes. So the government hasn't been able to provide this supply, the supply that they promised, the $10 billion in the housing fund to deliver 40,000 homes has delivered 2% of those 40,000 homes so far, two and a half plus years down the track. I think it's just too easy to point to property investors as part of the problem. I think it's supply. And I think also like money is not worth as much as it was because we're in a phase of huge public infrastructure spend. And that public infrastructure spend, you think about second runway in Brisbane Airport, the second Sydney Airport, Melbourne Metro, Sydney Metro. There's a lot of infrastructure projects going on and they're actually competing for construction trades. So they've failed at that promise and now it's like, gosh, do we sort of own up to that? No, it's property investors, they're the problem. Very good. A question from James. My question can be summarised in two words. Victoria, WTF. What is WTF? Stanford, Mike. Witness the friction. Okay. So as a long-term property owner and investor in the People's Republic of Victoria, I have watched my property stagnate in value over the past five years. Whilst property owners in the rest of the country have been raking in the gains with their properties doubling in value in many cases, even Darwin has been doing well. How do the panelists see the prospects for Victoria moving forward? Should we all sell up and move north to warmer and greener pastures? I'll start with you, Mike, because you don't live in Victoria. No. So what's your unbiased opinion? Oh, look, they'll be biased. Land tax is the big one, right? In our own data, so what I, when I talk about our data, I'm mostly talking about tax depreciation schedules that we do for property investors. And because we're a national business, we can see where are people buying? Are they buying in Victoria? Are they buying in Queensland? Are they buying in WA? It was WA, 2023. Queensland and WA have always sort of been fighting side-by-side for the top spot. Long-term average Victoria was around about 16%. Probably 12 to 14% in the six months preceding land tax plummeted to 4% straight away, basically overnight. Not just land tax, minimum standards, legislation, lots of different things. Vacancy taxes. I mean, you guys know way more about that than me. But it's been completely on the nose. Investors are basically saying, look, we feel like we've lost the rights on this asset, a friend of ours, Simon, acquaited it to like renting a car and the tenant sort of saying, "Oh, I know that I only rented it for a week, but I'm actually thinking I'll bring it back like Tuesday week." That doesn't happen when you lend a car. There's a least term. You have it for this period, you give it back. There was a a lot of people sort of saying, "Well, I feel like I'm losing control of my asset." Even the minimum standards legislation I heard from Property Managers, the consultation period just really didn't exist. It was just, this is what the rules are and we have to do it. So people voted with their feet. They're like, "Screw Victoria, I'm not going to invest. I'm going to go into Brisbane. I'm going to go to Townsville. I'm going to go to Perth." So look, I think it's not too hard to understand why the Property Market hasn't done anything. However, now it's quite different. Because if you look at the leaderboard of house price in terms of mediums, it was always like Sydney and then Canberra for weird reasons because this too many overpaid public servants. Then it was Melbourne. Like Melbourne, in my head was always second because I didn't count Canberra as a real place. Now, like, just lost all the camera, listen to this, thanks for that, if there's anyone. Maybe, yeah, maybe, maybe listening to the pod, but hopefully there's no one here. But now, like, Victoria is not even mid-pack, it's bottom-mid-packs. Yeah. As I shared at the start. Sorry, yeah. (laughing) Not only do I not, this is how I've actually done this to do your love, Dave, I'm sorry. So look, I kind of think that things are changing right now, but we just aren't seeing it in the data. So the February data, I think, saw a 0% growth for Victoria, and I think if you look at the three-month, that's actually negative 0.4%. But all the actions in that lower quartile, and that's where it gets a bit perverted, because we talk about mediums, right? And if there's so many transactions happening at that lower point, like with first home buyer incentives, and that has just really distorted the market across the country, like in Queensland, where the cap, I think, was 950k, anything in that price point went up 50k in about 30 days. Right, so we're seeing so many spinnings of the wheel in that sort of sub-median point, that there will be pockets in Melbourne, and I'll maybe hand over to Kate after this, that will be doing 10, 15, 20% growth, but you won't see it in that median price point. So I actually observed in her own data, the Townsville was the number one SA3 location for our investors, or people that bring investment properties to our business for 2025. Ballarat has definitely approached the leaderboard, and maybe in the first six months of the year, it'll actually be the number one location of any statistical area three in the country. So I think it's, it does with your business as data. Yes, yeah. And how's Melbourne looking or Victoria at the moment? Oh, I can look into the other states. I haven't got that number to hand. I mean, that would be really bloody helpful, wouldn't it? But I mean, it's bouncing back hard. So the land tax, the minimum stand, it's all priced in now, right? We're talking median house prices sub 900K. Melbourne is cheap. And like, there's no other way to describe it. Melbourne is cheap. For the first time I can ever remember. So for anyone that's holding property in Victoria, don't be too depressed. I feel like there's a lot of attention on Melbourne property, on even regional Victorian property. So I think we'll see some gains in the next little while. Okay. So in 20 words or less, should we sell up and move? Should they sell an investment property in Melbourne and get somewhere else? In 20 words or less, try to deal with one word. One word, yes or no? No. Give me a couple more. Yes, 'cause it's bloody cold here, but no, because your prices are going up. Okay. It's not the 20, very good. Kate. Melbourne, I've started with my fate because I've got multiple properties in my portfolio and most of them are in Victoria. And it has been a painful few years. There's no doubt about it. But to my point, I want to talk about the reasons why a lot of investment, houses and what would you call them? Hot spotting people at a point in Melbourne. And some of them, I think they've got really good theory. Others I just wonder if they're fulfilling itself fulfilling prophecy. But our value proposition is enormous. What I think is really interesting though is when you contrast our median price against Sydney or against Adelaide or against Perth. And when you look at each of those ratios, just on their own and have a look at where their historical ratio was, it's pointing all of the ratios as suggesting that Melbourne is undervalued. And some like it, whether Adelaide's overvalued or sitting at parity, I've got my own view on that. But Melbourne, I think, will struggle to say anyone that suggests the ratio is not pointing to the fact that historically we've not been at this level before. We've been on leaderboards and Dave talked about as being number six now. I've seen the leaderboard when you can find a graphic that's really interesting and shows where we've sat at number two, number three, number four. And we've been this low before, but we haven't had the same ratios before. And if you follow what mean reversion actually means, historically we shouldn't be sitting at this level long term. We haven't had what I would call it any critical changes that would suggest that Melbourne has changed. We've had some hurdles, there's no doubt about it. Our land tax is an absolute pain and it did rattle a few people. But unless you're looking at a very expensive property, the land tax bill is not so horrendous that it would put a committed investor off investing in Melbourne. And the land tax that we're looking at, the height land tax, we used to have a threshold at $300,000 worth of land value. It's now down to $50,000, so a dog kennel qualifies. And if we have a look at how long that land tax height rate is in place for it was 10 years and we've already done two years of it. So while it hasn't been very enjoyable, it's not forever. - We shall see. - Yeah, well, I can't think like they will be seen. - So addicting to that drug. - Yeah, it's an important drug, there's no doubt about it. But the value proposition, I want to bring the conversation back to that. In my business, which is taking a pulse all the time of investor sentiment, we're not just getting investors targeting Melbourne, we're getting a lot of Sydney signers moving. And they're all young. So they're in their first 10, 15 years of professional life. And many of them haven't started thinking about family yet, but they're singles or couples, and moving to Melbourne. The value proposition is enormous, and the cost of living is a lot more attractive than some of these more expensive cities. I've just started seeing other cities moving to Melbourne as well. So that value proposition is an enormous draw card for Melbourne. But to not just focus on value because we're cheap, we've spent a lot of money on some grading for structure. We've got a city that's much easier to get around. I live in Yarraville and it's been a night man dealing with the tunnel in the West, and also the Metro project. I've had to take data every day for about five years. All of that stuff is rolled out now. So we have a lot on offer. What's more, we've got a really attractive looking population forecast, and we're bringing in skilled workers. So I'm definitely not giving up on Melbourne. I am biased, and I am committed because I've got investments here, but I think it's a low point. And to the person that asked the question, you've come this far, and we've just started saying modest gains. In 2025, we didn't have a single month where we stepped back. This month, we've done zero percent. I think Melbourne's got a bit in store. We just need to be patient. So we're not selling. Not selling. We're not selling. Coming up on next week's podcast, the Property Trio Unpacked Reverse Mortgages and how they might fit into retirement planning. We broke down the strategy, the risks, the myths, and what people should know before making this kind of decision. Stay tuned. (upbeat music) All right, Dave, what are you reckon? - Right, oh, so I'll start with a bit of data. So Victoria has only increased in value by 11.8% over the last five years. Western Australia has increased by 90%. Brisbane 86.7%. So obviously we've been very flat for five years. For the 25 years leading into that, Melbourne was the best-performed capital city. Okay, so Melbourne's had a great run for 25 years. Property markets are cyclical. Okay, so when is a good time to buy in a market? It's when yields go up. That's when it becomes affordable. That's what Melbourne is right now. Melbourne has high migration. It has the largest international migration into Melbourne of any capital city. It has a lot of infrastructure. It is a world-renowned capital city. People want to move to Melbourne from overseas, but also interstate migration. So, but Melbourne shot itself in the foot. Okay, so we bumped up land tax. We bumped up our taxes. We made investors pay a price. If you have a holiday home or a vacant residential property, you'd pay a price. We made it hard for landlords. Okay, so people didn't want to buy here. We're carrying a lot of debt as a state. But also one thing Victoria and the Victorian government is actually exels that is building new property. Okay, so Victoria is built more new property to September 2025 by 10,000 properties than New South Wales, even though our state has a smaller population. Okay, so part of it is actually the state government being successful at building property, which ironically is what most of the country is trying to get better at. So the state government actually does some things well. You may argue, depending on which side of the fence you sit on, but that certainly played a part in property prices being stagnant in Melbourne and Victoria over the last five years. Obviously the lockdowns have had a long lasting impact on people wanting to live in our city and our state. And that's cast a shadow over the city, over the state, over our government. We have a election later this year. Maybe things will change at that point in time. We all have an ability who is from Victoria. Why are you laughing? To make a difference there. I mean, you look at obviously the CFMEU issues, the amount of wastage that's been in this state. That has been a real problem for Victoria. But as I said, there's plenty of positive signs and they're both touched on some positive signs. So really, I mean, at the end of the day, you, at this point in time, you need to be looking at where do I want to park my money over the next 10 to 15 years. That's what I'd be thinking about. You know, at the end of the day, I'm not, I actually don't pay for mail or Victoria. Or any city else. Calling would actually be. Well, calling it. It's very for calling. Yeah. Or Australian cricket. Melbourne can be a very good investment. I think if you have a diversified portfolio, do I want to own an asset in Melbourne? If I'm owning, you know, three, four, five or more properties, yes. You know, where do I next put my investment dollars? That really comes down to my own situation. How much money I have, what my, the rest of my portfolio looks like, what my timeline is until retirement. So do I think Melbourne will rebound at some point and go from sixth to back to second or third? Yes. At some point in time, that'll happen because Melbourne, Melbourne's going to overtake the population of Sydney. And I think about the next five years. You know, Melbourne will attract money and prices will continue to go up. A lot of what's happening with the median price as Michael K. the looted to is Melbourne and Sydney have a much larger prestige market. Those properties aren't turning over as much as they had. And if they do sell, they're selling for less than they did like 12 months or 24 months ago. So that distorts the statistics in Melbourne versus other capital cities. So yeah, that's basically my stuff. Okay. So everyone's keeping their properties in Melbourne. So I hold the proper amount. The type of segmentation. Go on. Market segmentation. So, mountain field and we're talking about different price points. If you have a look at the data, just to have a look at the Cotality data and the monthly chart back, we can see which quartiles are out performing. So the middle quartile and the bottom quartile are doing well, Melbourne's top quartile, negative growth. So as someone on the ground, I'm experiencing the options where you've got seven bitters. It's happening. It's not a flash in the pan. But I'm also experiencing the options where the agents ring a meal Wednesday saying, we could sell this thing prior and wrap it up and not have to go to auction on Saturday. If you like. And that's agent code for I'm struggling with other people on this. Can you just give me the reserve and we'll just get this deal done? And that tends to be the higher price properties and new things change. But we're boating this market when the three million dollar properties were highly contested. But right now it's definitely the sub 950 market. And some of these markets that I've been active in for a long time have done over 10% in fact, I'd argue that I can name three suburbs that have delivered over 15% in the last 12 months. They're the lower price markets at the moment. We've had investor interest. We've got first home buyers who are all incentivized. So segmenting the market is a vital skill to have when you're assessing a market. Excellent. Thank you for that. So that's our listener questions. So you'll get an opportunity to answer questions but not just yet. I've got a few more here that I would like to ask the panel. COVID reshaped our property landscape, reshaped many things. But temporarily and permanently, how have the permanent changes impacted things? Who'd like to start us off? I'll put my hand up. Okay. And up. Speak to us. This working from home. Massive. Massive change. These days when COVID lockdowns really hit, you just added plus one to bedroom count. Anyone that was happy with a two bedroom property, it's got to be three. Anyone that was happy with three bedroom, got to be four. So I was suddenly finding myself looking around these innering areas trying to find five bedroom houses, whereas hands' teeth, they went through the brief price wise because of that scarcity. These days, we've eased up on that requirement a little bit but everyone wants somewhere to work from home. I don't want to sit at the kitchen table. So we've got creative study looks. We've got pods in backyards and we've got spare bedroom. So that's a lasting impact. And here in Melbourne, particularly, well, here in Victoria, but particularly in Melbourne, a lot of workers have adopted that permanently or they've got four days a week working from home in one day in the office. They go in for Thursday, Monday. So that's been a permanent change. Thanks for that, Kate. Dave. We've worked from home, it's certainly been probably the most substantial change since COVID. So it's easier to work and live in the regions, move to a climate that you would prefer to live in. And yeah, that certainly played out to some degree. For example, I think gold coast is becoming even more of a hub. I think it's becoming a bit of a tech hub. People are moving more into places if they have that capability to work from home. So obviously that's been a major change through COVID. I think one thing that happened through COVID and that came out with some of Mike's data was more people were willing to buy into state. And I think that's hung over as well. So what that's done is also mean that I think buyer's agents, there's bigger buyer's agencies and I think they're actually making an impact on property markets and on smaller populated cities and towns because people became more willing to buy side unseen, to buy from a buyer's agent who maybe is in a different state to them, who's buying a property in a different state to where they live. And they can actually, they can move markets. So smaller markets. So I think that's been a change, buying into state but also willingness to work with more buyer's agents who will buy into state. So that's an interesting phenomenon. I think that's part of what's played out in Darwin, which I've spoken about when we did the Darwin deep dive last year and other times before. That's not a new thing for me to share but I think like two of the big things, you know, we've sort of just touched on it. Melbourne has been on the nose since COVID because of lockdowns, whereas Perth, because they actually kept their state and city closed, has had a rubber band effect. They had the weakest growth during lockdowns and during that phase of COVID and then they're flown since then. So, you know, I think in time, I actually didn't think Melbourne's lag would stick around for so long, but it has and obviously there's been government decisions that have impacted that which we've touched on. So certainly COVID has really helped Perth and Western Australia and it's from property a property price perspective and it's hard Melbourne in Victoria. Thanks Dave. So, if working from home is a big thing, then office property must be really taking a hit. If there are less people working in offices, then bosses need less space and so therefore I would imagine rents and vacancy rates would be increasing. We're very purposed. We're very purposed offices. Not all of them, but a lot of them. Two apartments. Ah, okay. You did that back in the 9, so I remember. Yeah. There's a lot of people talking about that as like, oh, that's just a perfect change and whilst it's true, it's not always economically. If I'm on like, it's often it's easier to just knock something down and start a gap from scratch. I think like, there's been a data point to say that data centers for the first time ever have seen more investment than offices in Australia and that's about the rise of AI and all that sort of stuff. But there's so much investment in AI that Mark Burry, who was the big short guy that predicted the GFC, he's kind of shown this web of inter-connected companies where Nvidia is selling chips to a company that's also like they're investing in and it's a really weird situation. The man going on with those big companies, making money out of AI, Michael chips. Yeah. But getting back to the Covid, like the data point that you were talking about, Dave, was interesting for us because we obviously didn't know Covid was going to happen. I haven't been to any wet markets or eating any pangolin or whatever the result of it was. But we were the first people to actually, I think, have the data of where does a property investor live, like the principal place of residence and where did they buy? And so we shared out to say the average distance that people live from where they buy an investment property was 293 kilometres. If I had a guess, I would have said 10% of that maybe. Because it's this old adage that people buy around the corner from where they live, they're very unsophisticated. They're like, "Oh, I want to buy an investment property." "Oh, you know, well, like the suburb next door is pretty good and I know a lot about where the graffiti is and where the good coffee is. Do you know who the employment drivers are and all that sort of stuff?" There's nothing to say no. But what we saw mid-Covid is that 290-odd jump to 512 and it even peaks a 1200 and then we saw it for a short period of time at 2,000 kilometres. But that really spoke to the rise of per- where 44-odd jump is a total of 440 kilometres. odd percent of all of our investors were buying in purchase. - Yeah, it's a huge number. - You didn't even talk about your dodgy dataset. - What was my dodgy? - I was like, "Rang me out." He's like, "I can't work this out, Bakos." He interact like some two that lives in LA or something. - Oh yeah. So the highest distance was 16,000 kilometers. I was like, I'm pretty sure the diameter of the earth has to all furs of fire on. And I was like, "Oh, yep, overseas investors." So I cut all that out and that, yeah. That thanks for bringing that out, I appreciate it. But COVID was wild. Like, one of my favorite stats is that ukulele sales went up 700%. And the divorce rate followed in concert. Not to the same degree, but I can't help but feel like people wanting to learn the ukulele, they're partners, they're okay. But we talk about a shortage of housing. There was a data point that said, because of the divorce rate during COVID, it actually demanded an extra 122,000 homes. Like we're talking about trying to build 240,000 a year, just by divorces in that period, it's like almost like half of that that we need. In my industry, it was construction costs. So what we saw in the beginning is people stuck at home in their house, 'cause they weren't allowed to leave. And they're like, "I bloody hate this place." So they renovated. Bunnings went mental, right? And then what we really saw is construction costs go through the roof. So Kate and I came across this free toss Baltic index. Do you remember that I said to you? That was a cost of shipping container of goods getting from one part of the earth to another part. And it basically went up 100%. And if you think about construction materials in Australia, I'm not sure exactly the percentage right now, but it was just over 60% of construction materials in Australia actually imported. So if you think about factories, like timber mills, shutting down, the cost of shipping goods, the fact that all of the materials had to come from overseas, we saw the biggest rise in construction costs that I've really ever seen. You know, we're talking around about a stensibly 30% in two years. Like right now in the December print, it was 1%, so on an annualized basis with 4%. So a lot of people are talking about now construction costs are rising really rapidly. That's not actually the case. It's just they rose really rapidly for a short period of time. And they're not going back to what they were because builders margins really suffered. We saw around about 3,500 construction insolvencies at the peak and construction companies and the building companies are still the number one on top of the podium for any industry for insolvency. So it was a really unusual time. Personally, it made me kind of realize that I am actually an introvert because my social calendar didn't change. So anyone else realized that COVID, like their life didn't actually change? Maybe that's more of a new stuff, I also think, because Victoria, I know you guys got it pretty bad. But yeah, it was a crazy time to be alive. Okay, so what I'm saying is working from home and borderless investing with the two big things in as a result of COVID. All right, thanks. (upbeat music) - We love hearing from our listeners and we'd love to tackle more of your questions. So please, if you have any on your mind, no matter how great or small, send us a message. You can email us info at thepropertytrio.com.au or go to our website, Facebook page, Instagram, or simply click on the link in your podcast app under the play button and fill out our online form. (upbeat music) - I've got a question just specifically for Kate here. Dave and Mike, you can chime in if you want. How do you bid against a more experienced buyer's agents at auction? - God, I did read this question and it was a great listening question. And they were asking, you know, if I'm an inexperienced bidder and I'm bidding against someone that's got however many years of experience, how do I do this? It's not just a game of bluff, it's all about having a plan. So I've bid against non-buyer's agents and they've done a really good job. I've bid against a lot that have done a terrible job, but when someone knows what their absolute limit is and they've thought carefully about that limit, they've done comparable sales analysis, they've been out in the market for long enough, that's a really good idea of what the property is worth, how the market's looking because they've been to a few other auctions, they've been out of the gauge, you know, the strength of the market and they'll set a limit accordingly and it will be a little bit more than what that properties market value might be worth because they know that they're going to have competition. So then stand confidently, they're not talking to someone else or making decisions about their budget on the run and they'll put their bid out clearly and strongly and they could be shaking in their boots, but if they can just deliver that kind of approach and reach the finish line either the winning bidder or the under bidder, that can stand up against anyone like me because at the end of the day, I'm working for a client, I've been given a magic number, it's same thing, it's been worked out with careful analysis and consideration of their budget, I'm there to do a job, I'm very rarely on the phone with someone, sometimes you might tell me with an ear pracing and that's not to say, "Hi, you know, "or can you get it if you win another five?" That's not my job, we've already made a good decision about the amount of money that they want to spend. If I've got the ear pracing, it's probably because they're in a state and they just want to hear how it's going. So that's how you can bid against a buyer's agent and the thing that I see people do that costs them when they should have been successful at auction is when they go in with a bit of a vague plan. So I always say there's a pie chart of all of the bidders out there, I think 60 to 70%, might say, "Oh, the property is probably worth around 1.2-ish, "let's see how we go." They might not have done their research, but 1.2 might be at the top of the quaint range, they might not have even worked out what they think that property is actually worth, they're using the agent's guide. But the point is they're there, they've got an amount of money, they're happy to go a little bit more, but they haven't thought about how much more. That's 60 to 70% of people that I bid against. Then you've got maybe 20% who are thinking like engineers and they're saying, "Oh, I'm going to bid to 1.238." That's what they do, 'cause they're engineers. And then you've got someone who wasn't planning on buying property that day, and they come home with the case. So you've got all kinds of different segments on that pie chart. The ones that I often boot are the 70%ers, who get to 1.2, they might have been prepared to even go to 1.251.3, but they haven't got a plan, they're there with their partner, the auction is yelling at them with a gavel in his hand, and everyone's staring at them. They're freaking out and they miss out because they just lost their nerve. They should have had a plan. So that's what you need to do to betabise agent. - Have a plan. - Have a plan. - Have a plan. - Excellent. Exactly as Kate said, let's look, it's not actually about the auction, it's about your preparation. Seven steps to successfully bid against the grades of auctioneering like Kate. Step one, get your pre-approval in place. Be really clear on what is your maximum price point, and make sure that's linked to your actual cash flow and how much of a savings buffer you want in place after you settle on the property. Right, a lot of people don't go to the detail to actually understand what their cash flow will look like after they settle on the property and what they want their savings to be. That's step one. Then step two is be really clear on your property type. Okay, so a lot of people are still earning an airing which type of property do I want to buy? Understand what type of property you're looking at. You've narrowed the market down to five or 10% because you're really clear on your property type. Step three, location, one suburb, maybe two. You know, one part of a regional town, okay? Be really clear. So now you're really targeted with what you're doing. You know your price point. You've ticked those three boxes. Step four, this is something that not enough people do but this is a difference maker. Track the comprables. Okay, so have an Excel spreadsheet and track the properties of your type of property in your specific locations that have sold for 10 to 15% below the top of your budget and 10 to 15% above. Because if you do that, you know where value lies as well as any buyer's agent or as well as any real estate agent and maybe even better than a lot of the real estate agents because they only track their own sales and not other real estate agents sales often, not always. Okay, so comparable sales but you've got to spend the time to do that unless you're going to pay for a buyer's agent, which is fine. But this question is about competing with a buyer's agent. Step five, set your limit for that property. So where are you willing to go? Now a lot of people will have one limit. They might have a second limit if they get a bit emotional on the day. So if you decide you're a single limit person or you're two limit person, that's for you to know your own, I guess, emotional control on the day of an auction but set your limit or you're two limits and stick to it. Okay, so that's step five. Step six is do yourself for bidding. Once you join the race, you stay in the race, bid with confidence, don't demeure. And at the end of the day, you keep going until you hit your limit or until you buy the property and doesn't matter how great the buyer's agent or whoever they are, the bidders are, they've got a limit as well. It's probably going to come down to your limits anyway. So ultimately, what you want to be doing is buying well. So if you do all those other steps, you're going to buy well as long as you can understand what is a good quality property and what is a good quality location. So a big part of it is holding your nerves and step seven is just remember, don't worry about the bluff, don't worry about the noise, okay, just stick to your limit, put your hand up when you're ready to step in to bid and keep putting your hand up confidently until you hit your limit or until you buy the property. That's my seven steps. Very good, the seven steps to beat somebody like Kate. Mike, did you want to try me with anything? Have a bigger budget. You always win. You know, the other day, like, I've had the privilege to be invited by Kate to attend an auction and I showed up a bit like this, so she looked at me like this, like, and then she realised I wasn't another buyer's agent and relaxed. But just everything that she does is so purposeful where she stands, if she knows the auctioneer, she might give them the hug and it just she makes it look like a rigged thing, like with a pre, like a pre determined outcome. And that's her job. Like, if I was paying her money, I would want her to dominate people and it is actually quite terrifying to see her with the sunnies and a terminated face. But at the end of the day, like, she was gracious enough to get me emotionally interested, like any good move it's like you need an emotional connection before the tsunami comes. Otherwise, you're not sad when they perish. So it was like, tell me who are the people, you know, what are they buying? Like, what are they about? And then tell me their budget. And I knew her budget. I knew her ceiling. But even standing beside her, I was like, she can't lose. She can't lose. But in my head, I knew that like, if it goes to this point and she's out, like, she can't make up and go like, I'll ring them later. They'll be fine with another hundred grand. Like, that's not how it works. But like, there's just so much power in somebody who's done the rep. So my advice would be if you don't, if you can't just have unlimited budget, because that's the way to win. Like Kate will have a cap. Like her clients will say, at 1.2, I'm prepared to walk away. So if you have 1.3, it doesn't matter how good she is, right? You might be out of the pain, but you'll win the bloody thing. But you've got to realize that if you are there trying to buy something and you're competing against people like her, she will see you men visible, right? So you need to not be the person going like, oh gosh, I'm not sure. I better talk to my partner. You've got to have that clear before you show up because you need to be a terminator as well. Very good. I mean that. So with moral, all-story, all-resonance. If Kate's in an auction, just walk away. Yeah, but no. Yeah, or just pay over market. Do you want the bloody thing? All right, so I've got a question here about mortgage strategy. So we're going to start with Dave. So we've had a look at our top five most listened two episodes. And interestingly, two in the top five are about mortgage strategy. One is episode 48, Offset Accounts, God's gift to mortgage strategy. And the other is episode 184, interest only versus principle and interest. Why working through the different considerations could add millions to your nest egg at retirement? So Dave, what do you think it is about mortgage strategy that resonates so strongly with listeners? And for someone who's trying to build wealth through property, how important is getting the loan structure and repayment strategy right from the start? Well, I think people hate debt. Property is a decisions we might make once every five years, once every ten years. Most people are only making three to five property decisions in their life. Whereas debt we're carrying for generally decades. So it's something with us ongoing that we need to keep considering. We need to keep factoring in what's our strategy? How does it change? What's going on with interest rates? How do I use an Offset Account? How do I maximize my tax deductions? How do I purchase the next property? How do I upgrade my home? Do I keep my existing property when I upgrade the home? So there's a lot of this is driven by your mortgage strategy. Because the whole mortgage industry has been built around selling an interest rate and it way over simplifies what goes on with mortgages, people are confused. There's nowhere to go to actually gather this information. You know, there's not a university degree on it, there's not lectures on it. So I think that's why two of the top five are our mortgage strategy sessions. Why is it what are some of the things you can do within your mortgage strategy to actually create wealth and manage your risk? What you can do is you can optimize your Offset Account, okay, and pretty much it's basically the glue for everything else. So you can preserve debt by putting extra money into an Offset Account rather than paying down a loan. If you want to turn that property into an investment, property down the track track, or if you think you might buy another home down the track, okay, so Offset is a way to manage risk. Our mortgages are our greatest risk in our life, generally for most people from a financial perspective. So a good strategic mortgage break will help people think through and feel comfortable about how you're going about your investment decisions, and how you're managing your debt through that. So risk management should be a critical part of any mortgage strategy discussion you have, but that's part of why two of our top five are mortgage related because people are worried about being able to pick their repayments over their lifetime. You know, that's natural. Money management. So how we manage our money is through our mortgage strategy as well. So some of them just have multiple Offset accounts. Some don't, you know, barefoot investors sold millions of books on having buckets. So people want to know about buckets now. And you can have different ways to set up your money. So that's part of your mortgage strategy. So that's why people listen to these episodes. How you optimize your tax deduction, deductions is really important. And that's why the repayment strategy episode is in there because paying interest only on tax deductible loans obviously preserves your tax deductions versus principal and interest. But you know, if you have a home that might become an investment property down the track, you might want to pay interest only on it, but it's counterintuitive. Also, interest only can provide you with greater flexibility and allow you to manage your risk when it's linked with an offset account. But you can still be reducing your interest at the same time. There's all these nuances that it actually does make a difference to our long-term financial position. So, you know, I think there are some of the reasons at the end of the day, why do we love property? Because it is where we spend a lot of our life. So it's such an emotional thing. We remember our childhood raising a family, you know, having children, whatever it might be. Plus, it's actually the primary source of wealth creation in this country ahead of shares by a long way. Okay, so it has this sort of hybrid thing and how it funded is through finance. So we want to make sure we're getting all the little bits and pieces right around the mortgage strategy for the people who do borrow money when it comes to purchasing properties. So I think that's why often the mortgage strategy episodes, probably also because they're not as regular, you know, so they're spread out a bit more. So, or do you keep clicking on it Dave, just so you're like, your topics and life, life, life, life. Does that count? I'm not sure it does. Just a quick reminder, you can access our show notes, including links to all of the resources we talk about on our website, which is the propertytraeo.com.au. So for those people in the room, it's your turn. We do have time for a couple of questions and we'll keep the answers relatively short. But if you wanted a more detailed answer, we will still be here after 8 o'clock and happy to chat to you one on one. Oh, we turn it into an episode. Oh, into an episode. I promise. Either way, stick around the bars. Yeah, free bar. All right, it's got a question. Yeah. First one, break the ice. So I've been listening to you guys for ages. That's really good to see your face to the name. My question is, is it like when you're converting your property into an investment and you're looking for a property manager? I know how you guys have talked about it being important to find a good one. But how do you go through the process of looking for that good one and knowing what they do is probably, especially if you're not in the same state and know how everything works? Awesome question. I love it. I've always found that word of mouth gives you a really good start and then interviewing. So a lot of us don't interview the property manager like we're interviewing someone that's going to join our team and work for us. But it's a high-charge approach. You've got to have that understanding with them. You need to have components that they'll do what they'll say they do. And when you've got a referral, you can follow up on that. You can look at other reviews, but meeting them face to face and having a checklist. If anyone needs a checklist, give me a yell. I've got property manager. I've got a blog. All right, which will be helpful. But the But the one thing I will say is if you. If you get it wrong or if they move on or if they assign someone else in your not all that happy, breaking up with your property manager is the easiest breakup in the world. You can outsource it. You get the new property manager to break up with the old property manager. They even pick up the case for you. It's the easiest thing ever. So, word of mouth, having the checklist, interviewing the meeting the main person and if you're not happy, move on. Excellent. Thanks. David, would you have nothing to add there? No. I don't want it. Mike, anything to add? There's some good checklist out there. I actually had one that was designed by a property manager, used Kates One. I think it's like we're hesitant to go to, let's say you have an injury and you go to a physio. Like, nobody sort of says like, if you had much experience with these injuries, like, you know, what are some of the recovery times? And I've asked like professionals like physios and caros that say to people ever asking to say no, I wish they would because I would smash my competition because I've spent so much time specializing in that. So, I would just say don't be afraid. Ask them, what's your arrears policy? You know, what are you noticing with the demographics of what's in demand, different property types? And, you know, how do you approach your market reviews? And if they don't have good answers to those questions, you just kind of move on. But, to Kates Point as well, like, I think we feel like we're stuck with our account, we're stuck with our property manager. So many people that buy an investment property and then the selling agent says, oh, we do PM as well. They just go with the PM because they think, oh, that's so much easier, but it's really not that much easier. And just because they're there in adjacent doesn't mean they're the best person to do it. So I would just give you the confidence to say ask the questions. If you're not satisfied, you find the next one. And I'd also like to ask about the size of their rent role because it will be something that they'll be proud of. What's your business's rent role size? Oh, yeah, we've got 2,000 on-demonagement. How many property managers have you got in your team? You just do the maths. If they're looking after more than 130 properties in one portfolio, they're overloaded. You won't get the same service. Excellent. Do I have one more question? And then we can still have one-on-one questions. Yes. Kate, Margie, big fan. I don't want to get too political here, but with the situation unfolding in the Middle East, can you see that having a short or medium impact on property prices, with petrol prices going up and imports and exports getting more expensive, things like that? Bad sort of feeds into the last segment we were going to touch on, which was our expectations for the rest of 2020. Excellent segue. So we'll just continue on. I think we do have one more question over there. Okay. We go even in. Yeah. So, look, my thoughts are there is absolutely a risk that put impact property prices in the short to medium term. It's likely that oil prices are already starting to rise, so that's going to have some impact on inflation now. Is that short term? Is it medium term? Is it long term? We don't know. So that instability is possibly going to push up interest rates. At the moment, I think the markets have priced in 100% likelihood of one rate rise by May and I think it's like an 80% chance to rate rises by October and November. That's as of today or yesterday. So that is obviously going to have the potential to flatten out property prices without a doubt. But I think on the other side of the equation is the federal government going to start building lots more property and provide a great level of supply. No, I don't think so. So I think there's definitely some short term risk around that, but over the longer term, property in Australia generally finds a way to rise above inflation. OK. I've got a couple of thoughts on that. That's a great question. Firstly, the instability, the political instability that something like that can create. We say people rush to gold when we have instability. People also rush to bricks and mortar. So there's a little bit of comfort to be placed in that. But I think we'll see segmentation like we saw when we last had freight-related issues. So when COVID disrupted things, I don't know that a war in the Middle East was quite different, but the fuel and the freight disruption is a big thing to think about. And what that did for parts and for production and for building materials was horrific at the time. I remember the shelves were stripped bare in bunnings. You couldn't get timber. And I thought, what is going on? It's like something I've never seen before. And I think that that freight issue will take grip and create similar issues for us if this is a long-standing situation that we all have to navigate. And what we saw in the property market was a two-speed market where anything that was renovated went like a hot cake and sold for a ridiculous amounts of money. Anything that was nice but dated and daggy, you could pick up for a relative bargain. And an ugly duckling that was barely livable, super bargain. So if that does play out and anyone said to me, "Cate, where is the value to be had?" I'd say, "By the house that is as ugly and as daggy as you can stand." And make sure that you can live in it for a while until the building and the material shortage issue calms down. And then do your renovation because right now I'm seeing a ridiculous disparity between renovated and unreinvated. It was just starting to close and show some promise. And I think this global instability might open that differential back up. That's my prediction. Mike? We had a question over there. I don't want to lose that opportunity there. But look, I don't think it's a boots on the ground or from the allies outside of maybe the Israeli defence force. I think they're kind of running point on that. So I think it'll be a little bit of a different sort of war. There's a fair amount of freight that comes through the straight of a moose, so it's an inflationary risk. I think the data Dave's pointing to was probably predates the Iran conflict. We might see oil prices do some crazy stuff in the short term, but that hasn't been the big sort of driver for inflation in terms of the basket of goods, CPI stuff. Like it'll definitely exacerbate the situation. But like implications for property prices, I think it will be. I don't see a huge impact from the war around there. OK, and we've got one more question at the back. We said, here we go. Gentlemen, over here. Hi, this is a bit of a political one left to field, but with regards to renting, does the government have plans to introduce a policy whereby prior to receiving a welfare payment, the rent amount used deducted and paid directly to the agent landlord with the balance going to the welfare recipient? It's just something I think that would incentivise agents landlords in providing housing to people on welfare, but as well as mitigating the risk in rent not being paid on time, or in some cases at all, what do you guys sort of think about that? I'm honest with you. Is this my short bag? A nice question, Ricky. So the question is around whether a welfare recipient can have their rent paid before they get the balance of their welfare. It exists and it's free service. It's called centipede. If you're not on it and you've got a welfare recipient renting, I think it costs you like a dollar per rental period. Best investment you can make. There you go. So it's already there. Yep, centipede. Excellent. And it's a good idea. Very good. Another one. OK. Two questions, Fee, while me. CGT. Yeah. Do you think it would be grandfathered? The legislation itself? Yes. And the second one is around, as Kate would know, I like contra-investing. You're spoken already about interest rates. Look like they could be going up. But when you look at what's happening in the market at the moment, there's going to be these announcements about CGT, about negative gearing. That's all negative publicity, which we were seeing years ago pull properties back on a halt. Is it the best time to wait for that to occur? And then to look to invest in by-property. I look, I'll jump in and say yes. Like, I get frustrated with green shoots, investors, right? They look like, oh, look, Hobart did 1.2% in February, and now we jump in. Well, the time to jump in was when it was really, really on the nose. You know, talking about Melbourne. Like, Melbourne's data's not there. Like, ideally, you want to be into something before the herd is moving in there because of that data lag, right? The CGT staff is going to be grandfathered. Like, I think it would be politically dangerous to not grandfather it. However, the Gratten Institute have come out and there was an interview on the ABC where they're saying we will strongly recommend that it's not grandfathered. So it's interesting to see how much influence that might have over Labour Party policy. I think that probably will be grandfathered. Like examples that we've seen, like on the 9th of May, 2017, the depreciation changes. That was basically from that point in time, literally, when Scomo started speaking at 7.30 PM on the 9th of May, 2017, it was from that date onwards that that legislation took place. So I think that precedent is set. But yeah, like we do see knee jerk reactions in property. If you look at property over 100 years, GFCs and all sorts of things, a little tiny blips, we overestimate the importance of the stimulus at the time. But over the long term, it comes out in the wash. So yeah, I like the idea. It's the old Buffett thing. Be greedy when others are fearful and fearful when others are greedy. Kate? Yeah. I'm completely. agree, I can truly invest in the tax enormous courage and self-belief. If anyone asks me over the last five years, when was the best time to invest in Melbourne? It was 2024. I couldn't get people to to feel my enthusiasm for that period of time. Property prices really slumped then. I think back to when COVID first broke out and that initial two weeks where people just dropped like flies and didn't want to buy property that plans changed and it looked like we were going to have 30% price falls and the prices that I had achieved for the very few clients that stuck with me for that two week period on the pandemic was announced. Our enormous bargains and all of a sudden it took off and then it was crazy. FOMO. So yeah, there is something to be said for it but you've got to have the willingness to stick with a long term and really back yourself. Don't you? Yeah, I agree. The best time to invest is probably just after they announced the CGT changes and legislate it. That's probably when you're going to get the biggest discounts there and obviously with the instability, the Trump has the midterms coming up I think in eight months or something like that. So there's a lot of talk about the fact in it. It's to pull out of Iran before then because a lot of his base aren't happy with him attacking Iran and that polling's already come out. So the likelihood it's going to be a long-lasting war is pretty low politically for Trump. So the best time to invest is when the prices are depressed because history tells us, we've talked about this a lot over the 350-yard efforts. If you look at the history of property prices, prices only stay low flat generally, not always, not all capital cities. Certainly the mining cities are a general exception but nationally six to maybe 24 months. Okay, whereas Boons tend to last a lot longer. Okay, multiple years. So if you have a long-term plan, you're able to hold for 10, 20, or 30 years ideally. Well then if you buy somewhere in that six to 18 month trough and you're able to hold the long-term, you're probably going to do very well. Thank you for that. We had some great questions here from the floor and remember if you've got any more afterwards, we're going to hang around for a little while so you can chat to us one-on-one if you would like. All right, just to wrap up, what's going to happen to the property and finance markets in 2026? So let's go for Mike first. Interest rate rises. I mean no, I want to hear that but I think the writings on the floor, there's too much data coming out there. I think we'll continue to produce an under-supply of from now on. I was thinking until we can fundamentally change that through construction, productivity, which is in the toilet. A change construction method, construction materials. Yeah, then that just basically says that you want to be owning as much property as you possibly can in the short term. It doesn't really matter how much the government is disincentivising it. They don't have, they can't step in and replace property investors. They don't own enough property. So I think that they will get their fingers burnt and they'll realise they need investors and may end up re-incentivising them. So look, I'm bullish on property for 2026 and sadly I'm all just going to go up. Kate, I'm forward to the start of the year that we'd have a year very much like 2025 for Victoria. I think we've got a few headwinds and more so things that make people a little bit jeerry. So I think it'll be a little bit stop start and talk of interest rate increases or interest rate movement. People tend to get nervous and do nothing for a bit then the announcement comes out. And whatever it is, they can go and purchase property. It's a really interesting phenomenon. But we've got a state election in November. I think we'll see people do what they do when state elections are looming. I'll start to do nothing. It might be an opportune time to buy at the end of the year when we get greater stock levels as well and there's a little bit of nervousness. But I'm not predicting it will say double digit growth in Melbourne. But I'm not predicting it will say price falls or growth. That's all that dissimilar to what we had last year which I would describe as just a modest recovery. Dave, I'm not sure if it's going to be 2026 or not. But I think Brisbane, Adelaide and Perth are going to start to slow down over the next sort of 6 to 12, 18 months. I don't think it's sustainable. The capital growth they've had over the last three to four to five years. I think Melbourne will turn things around. I think its prices will start to become so relatively affordable that people will buy in Melbourne again and that's already starting to happen. People are migrating to Melbourne, investors buying in Melbourne. I sound like I'm back in for Melbourne, but if you listen to all the six years of the podcast, seven years even, I don't tend to back for Melbourne. But I do think a lot of the metrics add up yields have never been equivalent or better than Adelaide, Brisbane, etc. But look, there are definitely some headwinds with potential for rate rises. Obviously the war in Iran, inflation, low productivity, there's definitely risks. But there's always risks. There's been risks for 50 years, 75 years, and Australian property has always outperformed inflation, the cost of living by two or three percent just in the growth side of the investment, let alone the rental returns. So it really does come down to your ability to hold for the long run and make sure you have a good property plan. Very good. Little sales pitch. Great way to finish off property plan. Okay, so that brings us to the end of our recording tonight. Thank you very much for coming out tonight and being part of our very first live podcast. We really hope you enjoyed the event. So can we please put our heads together for Dave and Kate and Mike and Pete. On that note. And a very big thank you to Amarie. Where is she? There she is. For putting it all together tonight. Thank you very much, Amarie. There you go, Mr. Thank you. Big thanks to Pete. For coming all the way over from South Australia. We're the most expensive week of the year. We've got the golf free. We've been trying to catch a flight and come and ice forest. Thank you. Thanks Pete. Thanks Pete. Where's the wine from, Kate? Which date? Never look. South Australia. Oh, surprise. All right folks, so I think there's some drinks and nibbles. Help yourselves. Help yourselves. Drinks at the back there. Have a nibble. Have something to eat. Hey, come and chat to us. Have any questions? Yeah. Hi there. It's Amarie from Property Planning Australia here. If you've enjoyed this episode and would like to learn more about some of the topics discussed, take a listen to episode 48 of Set Accounts. God's gift to mortgage strategy. Episode 184. Interest only versus principle and interest. By working through the different considerations could add millions to your nest egg at retirement. Episode 213. Exploring how government policy shapes investor behavior. Decoding the Queensland land tax ripple effects. Episode 217. The inflation canundrum. Unraveling its causes and consequences. Episode 250. Investment boring masterclass. Maximise tax deductions and advanced mortgage strategies for long term wealth creation. And episode 343 and 344. The trio's 2026 predictions to part episode. Hey podcast listeners. It's Dave here again. If you're new to the property trio, welcome to the show. We highly recommend you go back to the original episodes and listen to the first 30, where we cover much of the gold and fundamentals of property success. Back then the podcast even had a different name. It was called the property planner buyer and professor. And you won't hear Mike's voice, you'll hear Peter the property professor Kalizos. So take a listen and all the best on your property journey. We have enjoyed hosting you on the property trio. Thank you for joining the property planner David Johnston, who's company at Property Planning Australia, provides the only independent pure planning advisory in Australia. Recently awarded the best mortgage business and customer service award at the mortgage and finance association of Australia's excellence awards. And the property buyer Kate Bakos recently awarded buyers agent of the year and the owner of a boutique independent buyers agency in Melbourne's in a West. And of course the quality surveyor Mike Mortlock, managing director of Australia's fastest growing quantity surveying firm MCG quantity surveyor. A two-time award winner of the Australian financial reviews and client choice awards. We've really enjoyed delivering this podcast and we'd love you to join us on our podcast web page at theproperitytrio.com.au or our Facebook page. Feel free to send us any questions and Dave Mark and I will answer them for you. So until next time remember that each property decision you make is leading you towards arriving at life stuff. Everything we talk about in this episode is general in nature and should not be considered to be financial advice. We have put a lot of effort into making sure the information is accurate but please don't rely on this information to make a decision. If you are looking for specific advice please seek the help of a specialist and remember, it's important you determine your trusted advisors are independent.